How do you pay for medical care when the bill is more than you can afford up front?

For many patients, that question comes up sooner than expected — whether it’s a planned procedure, ongoing treatment, or a surprise medical bill. A medical line of credit is a popular financing option designed to help spread healthcare costs over time. Knowing how it works, and how it compares to other ways of paying for care, can make the decision feel a little less overwhelming.

What Is a Medical Line of Credit?

A medical line of credit is a form of healthcare financing that allows borrowers to access a reusable credit line to pay for medical expenses over time. Rather than paying for medical care all at once, patients can draw from the credit line as needed and repay what they use through monthly payments.

These credit lines are typically offered by a third-party lender, not directly by a medical provider. Patients often use them when medical bills exceed what feels manageable upfront, especially for larger medical procedures, ongoing medical treatments, or care that isn’t fully covered by health insurance.

In practice, medical lines of credit function similarly to medical credit cards, such as CareCredit, which are also structured as revolving credit. While they can offer flexibility, they often include promotional or interest-free periods that rely on deferred interest, meaning interest can be added retroactively if balances aren’t paid off within the promotional timeframe, or if a single payment is missed during that time.

For some patients, a medical line of credit provides a more manageable way to pay for care over time. For others, it can introduce long-term medical debt, making it important to understand repayment terms, interest charges, and total cost before moving forward.

How a Medical Line of Credit Works

While details vary by lender, most medical lines of credit follow a similar process.

Patients begin with a loan application process that they can typically complete online. The lender then performs a credit check, reviewing the applicant’s credit report and credit history to assess creditworthiness. Based on this review, the lender makes a credit decision, determines eligibility, and sets a credit limit.

Once approved, borrowers can access the credit line as needed rather than receiving a lump sum upfront. In some cases, funds are available the same day, while other lenders may take a few business days. Repayment happens through monthly payments, usually withdrawn from a savings or checking account. Repayment terms, interest charges, and the annual percentage rate are disclosed upfront.

Many lenders provide online banking tools, notifications, and account functionality that allow borrowers to track balances, manage payment terms, and reduce the risk of late payment.

Benefits for Patients and Healthcare Providers

Medical lines of credit can be useful in certain situations, particularly when healthcare costs are high and payment options feel limited. The benefits can look different depending on whether the perspective is the patient or the provider.

Benefits for Patients

For patients, a medical line of credit can help make healthcare expenses more manageable when paying the full cost upfront isn’t realistic. Common benefits include:

• The ability to spread medical bills into monthly payments rather than draining a bank account to pay in full up front
  
• Greater affordability when insurance leaves large out-of-pocket gaps
  
• Flexible payment structures that support budgeting and financial health
  
• Continued access to necessary medical care, including elective services or ongoing treatment
  
• Reduced financial stress, allowing patients to focus on recovery, wellness, and peace of mind instead of immediate costs

These features can be especially helpful when medical expenses arise unexpectedly or exceed available savings.

Benefits for Healthcare Providers

For healthcare providers and larger health systems, offering patient financing can support more consistent patient payment behavior and a smoother financial experience overall. Potential benefits include:

• Improved cash flow and working capital through more predictable patient payments
  
• Lower patient credit balances and fewer unpaid amounts that could turn into medical debt
  
• Reduced strain on revenue cycle workflows and billing operations
  
• Fewer overpayments and billing follow-ups when financing is clearly structured
  
• A better overall patient experience when payment options are transparent and accessible
  

When patient financing integrates with existing EHR systems and billing functionality, it can reduce administrative friction while supporting patient satisfaction.

Common Use Cases for Medical Lines of Credit

Medical lines of credit are most often used when healthcare costs are difficult to pay upfront or when insurance coverage leaves significant gaps. Because a medical line of credit is reusable, patients can use it for multiple or ongoing procedures without having to reapply, depending on the lender and available credit.

Common use cases include:

• Out-of-pocket costs with health insurance, such as copays, deductibles, or coinsurance that must be paid before or at the time of care
  
• Elective and planned procedures, including dental care, cosmetic surgery, fertility treatments, and vision correction procedures like LASIK
  
• Personal medical equipment needed at home, such as CPAP machines, hearing aids, or mobility devices, when eligible under the financing program
  
• Medical emergencies or urgent care, when immediate treatment is required and insurance coverage is limited or delayed
  
• Situations involving high deductible health plans, where healthcare expenses exceed available HSA or health savings account funds

In these scenarios, patient financing can provide a flexible payment solution by spreading medical expenses into manageable monthly payments rather than requiring full payment upfront. Some patients prefer these flexible financing options when they offer competitive rates or lower overall costs compared to other short-term payment methods.

For healthcare practices, offering medical lines of credit for these common use cases can help patients move forward with recommended medical care while improving the overall payment experience at the point of service.

Comparing a Medical Line of Credit to Other Healthcare Financing Options

A medical line of credit is one of several financing options patients might consider when healthcare costs aren’t fully covered by health insurance. Each option differs in structure, flexibility, and long-term cost.

• Medical loans: Structured as term loans that provide a lump sum upfront with fixed repayment terms. Medical loans can work well for one-time medical procedures with a known cost, but offer less flexibility for ongoing or unexpected healthcare expenses.
  
• Buy Now, Pay Later (BNPL) financing and provider payment plans: Fixed installment payment plans tied to a specific medical provider or service. These options are often built directly into front-desk and checkout workflows, allowing patients to review payment options and enroll at the point of care. BNPL solutions typically feature transparent pricing and interest-free or low-interest structures, making total costs easier to predict for both patients and staff.
  
• Personal loans: Unsecured loans from a bank or credit union that can be used for medical expenses. Terms and rates depend on creditworthiness and may be used for larger costs or debt consolidation, though they are not healthcare-specific.
  
• Health savings accounts (HSA): Tax-advantaged accounts often used alongside high deductible health plans. HSAs can be cost-effective when funds are available, but balances may not be sufficient for larger or unexpected medical costs.
  
• Home equity loans or lines of credit: Secured loans that allow homeowners to borrow against home equity, sometimes at lower interest rates. These options carry higher risk because the home is used as collateral.
  
• Financial assistance and alternative support: Some patients may qualify for financial assistance programs, charity care through a nonprofit organization, partial coverage through Medicare, or internal medical repayment plans (MRPs) offered by healthcare providers.

Eligibility and Credit Considerations

Eligibility for a medical line of credit depends largely on a borrower’s credit profile. Lenders typically review credit score, credit history, existing financial obligations, and overall creditworthiness when making a credit approval decision.

Borrowers with stronger credit profiles may qualify for higher loan amounts, lower interest rates, and more favorable repayment terms. Some lenders allow patients to become prequalified with a soft credit check, while others require a full review of the credit report. Because activity may be reported to credit bureaus, approval and repayment can affect a borrower’s credit score and long-term financial health.

Risks, Fees, and What to Watch For

While medical lines of credit can offer flexibility, they also come with risks. Interest charges, high interest rates, late fees, deferred interest penalties can increase the total cost over time. Some lenders charge origination fees, impose hidden fees, or structure repayment terms that make balances difficult to pay down.

In some cases, financing products advertised as interest-free rely on deferred interest, meaning interest continues to accrue and is added to the balance if the full amount is not paid off by the end of a promotional period. This structure is commonly associated with certain medical credit cards, and it can significantly increase total costs if a balance remains after the promotional period ends.

The Consumer Financial Protection Bureau (CFPB) has raised concerns about how promotional financing, deferred interest, and unclear pricing affect consumers. Reviewing loan terms, payment terms, prepayment policies, and potential interest charges carefully can help borrowers avoid unnecessary financial stress and protect long-term financial health.

Frequently Asked Questions (FAQs) About Medical Lines of Credit

Can a medical line of credit be used with health insurance?

Yes. A medical line of credit is often used alongside health insurance to help cover out-of-pocket costs. This may include copays, deductibles, or elective healthcare services not covered by an insurance company.

For healthcare providers, offering patient financing in these situations can help insured patients move forward with recommended care instead of delaying treatment due to upfront affordability concerns.

How long does credit approval take?

Approval timelines vary by lender, but many medical financing options provide a decision within minutes. In some cases, financing may be available the same day, while other lenders take a few business days before funds can be used for medical services.

How do repayment terms and monthly payments work?

With a medical line of credit, monthly payments are based on how much of the credit line is used rather than a one-time lump sum. As balances are paid down, available credit may be restored, allowing the line to be reused depending on the lender’s terms.

Repayment terms typically include a minimum monthly payment, along with interest charges based on the annual percentage rate. Reviewing payment terms, interest rates, and total repayment cost upfront is important, as carrying a balance over time can affect long-term financial health.

Can medical financing affect credit over time?

Yes. Medical financing activity may be reported to credit bureaus, meaning repayment behavior can influence a borrower’s credit profile and credit score over time. Making on-time payments can support financial health, while missed payments may have a negative impact.

Choosing the Right Healthcare Financing Option

There’s no single right way to pay for medical care, but medical lines of credit are a common option for patients who need flexibility when healthcare costs can’t be paid upfront. By allowing borrowers to spread expenses over time, they can help bridge gaps left by insurance and make care more accessible in certain situations.

At the same time, medical lines of credit aren’t always the best fit. Variable repayment terms, interest charges, and the risk of deferred interest can make costs harder to predict, especially for patients focused on affordability and simplicity. Understanding how these credit-based options work — and where they fall short — is an important step in choosing the right payment approach.

That’s why many healthcare providers are turning to installment-based patient financing solutions like Cherry Payment Plans as an alternative. With Cherry, patients can apply for financing in just 60 seconds without hurting their credit score, and get an instant decision on loan options up to $50,000 with terms as long as 60 months. Over 80% of applicants are approved across credit profiles, and qualified borrowers have access to true 0% APR financing with no deferred interest traps.

Cherry pays the practice up front and manages the whole repayment process, eliminating credit risk and administrative burden. There are no subscription or setup fees, just the lowest merchant fees in the industry. Find out why over 50,000 practices already partner with Cherry to expand treatment acceptance and grow their small business. Claim your personalized demo here.